In spite of operating in a competitive retail landscape, Costco Wholesale Corporation COST has reported decent comparable sales (comps) number for the month of January. Although rate of comps growth decelerated sequentially, industry experts believe that there is nothing as such to worry about given its steady performance in the past. They further went on to add that sales generally increase during the month of December due to Christmas holidays.
Certainly, Costco’s better price management, strong membership trends and increasing penetration of e-commerce business have been crucial factors behind decent comps results. Moreover, the company has benefited from favorable job scenario, increasing disposable income and improved consumer confidence.
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This operator of membership warehouses reported comps for the month of January 2019. The metric increased 5.2% for the four-week ended Feb 3, 2019. This follows an increase of 6.1% in December, 9.2% in November, 8.6% in October, 8.4% in September, 9.2% in August and 8.3% in July. Comps for January reflect an increase of 6.6% and 6.5% in the United States and Other International locations, respectively, but a decline of 2.9% in Canada.
Excluding the impact of foreign currency fluctuations, gasoline prices and accounting change concerning revenue recognition (ASC 606), comps for the month rose 7.4%, while the same increased 7.3%, 4.6% and 11.2% in the United States, Canada and Other International locations, respectively.
Meanwhile, net sales improved 8% to $10.71 billion in the month under review, following an increase of 7.8%, 9.8%, 10.6%, 10.3%, 12.2%, and 10.1% in December, November, October, September, August and July, respectively.
Management highlighted that with Lunar New Year occurring 11 days ahead this year as compared with last year positively impacted total sales and Other International sales by approximately 0.5% and 4.5%, respectively. As a result, sales for February are likely to be negatively impacted on account of this.
For the 22 weeks ended Feb 3, 2019, net sales came in at $63.70 billion, up about 9.3% from $58.30 billion reported in the year-ago period. Comps for the period grew 7.4%, while the same increased 9.4%, 1.2% and 3.8% in the United States, Canada and Other International locations, respectively.
Costco is also steadily expanding e-commerce capabilities in the United States, Canada, the U.K., Mexico, Korea and Taiwan. E-commerce comparable sales rose 22.1% in the month of January 2019, following an increase of 13.6%, 46.1%, 20%, 28.6%, 23.8% and 20.9% in the months of December, November, October, September, August and July, respectively.
Costco, which shares space with Walmart WMT, Target TGT and Ross Stores ROST, continues to be one of the dominant warehouse retailers based on the breadth and quality of merchandise offered. In fact, its strategy of selling products at heavily discounted prices has helped it to remain on growth track. In a year, shares of this Zacks Rank #3 (Hold) company have increased 14.8%, almost in line with the industry. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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